Florida Senate Committee Proposes FCHF Bill

The Florida Senate Banking and Insurance Committee has released a proposed committee bill regarding the Florida Hurricane Catastrophe Fund (“FHCF”). This Senate bill is substantially similar to a proposal developed by Chief Financial Officer (“CFO”) Alex Sink, which was introduced during the February 8, 2008 Florida House Insurance Committee meeting.

The proposed Senate bill (SPB 7058), entitled “An Act Relating to the Florida Hurricane Catastrophe Fund”, would create a Division within the State Board of Administration to manage the FHCF and require that this Division enter into a contract with each insurer writing covered policies in the state of Florida to provide certain reinsurance benefits.

The CFO’s proposal would reduce the FCHF Temporary Increase in Coverage Limits (“TICL”) layer of risk exposure from $12 billion to $9 billion, increase co-insurance from 10 percent to 30 percent and reorganize the FHCF under the Florida Cabinet. To view the full Florida House Insurance Committee meeting report, click here.

The main differences between the Senate proposal and the proposal from the CFO’s office are:

• The Senate bill extends coverage for the TICL layer an additional year.
• Rather than decreasing the amount of coverage available in the TICL layer from $12 billion to $9 billion, the Senate bill maintains the current amount of TICL layer coverage.
• The Senate bill gives the new “Division of the Florida Hurricane Catastrophe Fund” the authority to determine the percentage that insurers will be reimbursed out of the optional coverage layers, but states that the amount cannot be less than 70 percent of the coverage available.

The Florida Senate Banking and Insurance Committee will workshop SPB 7058 during its meeting on February 19, 2008. We will continue to closely monitor this matter and provide updates as appropriate.

 

Should you have any questions or comments, please do not hesitate to contact this office.

 

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